10,000,000 Shares
U.S. RENTALS, INC.
Common Stock
UNDERWRITING AGREEMENT
February __, 1997
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
SALOMON BROTHERS INC
As representatives of the
several U.S. underwriters
named in Schedule I hereto
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
XXXXXXX XXXXX INTERNATIONAL
SALOMON BROTHERS INTERNATIONAL LIMITED
As representatives of the
several international managers
named in Schedule II hereto
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Jupiter House
Trinton Court
00 Xxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX, Xxxxxxx
Dear Sirs:
U.S. Rentals, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell 8,000,000 shares of its Common Stock, par value $0.01 per share
(the "U.S. Firm Shares"), to the several U.S. underwriters named in Schedule I
hereto (the "U.S. Underwriters") in connection with the offering and sale of
such U.S. Firm Shares in the United States and Canada to United States and
Canadian Persons (as such terms are defined in the Agreement Between U.S.
Underwriters and International Managers of even date herewith), and 2,000,000
shares of its Common Stock, par value $0.01 per share (the "International
Shares"), to the several International Managers named in Schedule II hereto (the
"International Managers") in connection with the offering and sale of such
International
Shares outside the United States and Canada to persons other than United States
and Canadian Persons. The U.S. Firm Shares and the International Shares are
hereinafter collectively referred to as the "Firm Shares." Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated and Salomon Brothers Inc shall act as representatives (the "U.S.
Representatives") of the several U.S. Underwriters, and Xxxxxxxxx Xxxxxx &
Xxxxxxxx Securities Corporation, Xxxxxxx Xxxxx International and Salomon
Brothers International Limited shall act as representatives (the "International
Representatives") of the several International Managers. The U.S. Underwriters
and the International Managers are hereinafter collectively referred to as the
"Underwriters."
The Company also proposes to issue and sell to the several U.S.
Underwriters not more than an additional 1,500,000 shares of its Common Stock,
par value $0.01 per share (the "Additional Shares"), if requested by the U.S.
Underwriters as provided in Section 2 hereof. The Firm Shares and the
Additional Shares are herein collectively called the "Shares." The shares of
common stock of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "Common Stock."
1. Registration Statement and Prospectus. The Company has prepared and
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filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively called the
"Act"), a registration statement on Form S-1 including a prospectus relating to
the Shares, which may be amended. The registration statement contains two
prospectuses to be used in connection with the offering and sale of the Shares:
the U.S. prospectus, to be used in connection with the offering and sale of
Shares in the United States and Canada to United States and Canadian Persons,
and the international prospectus, to be used in connection with the offering and
sale of Shares outside the United States and Canada to persons other than United
States and Canadian Persons. The international prospectus is identical to the
U.S. prospectus except for the outside front and back cover pages and the
section captioned "Certain United States Federal Tax Consequences to Non-United
States Holders of Common Stock." The registration statement as amended at the
time when it becomes effective, including a registration statement (if any)
filed pursuant to Rule 462(b) under the Act increasing the size of the offering
registered under the Act and information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A or
Rule 434 under the Act, is hereinafter referred to as the "Registration
Statement"; and the U.S. prospectus and the international prospectus (including
any prospectus subject to completion taken together with any term sheet meeting
the requirements of Rule 434(b) or Rule 434(c) under the Act) in the form first
used to confirm sales of Shares is hereinafter referred as the "Prospectus."
2. Agreements to Sell and Purchase. On the basis of the representations
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and warranties contained in this Agreement, and subject to its terms and
conditions, the Company agrees to issue and sell, and each U.S. Underwriter
agrees, severally and not jointly, to purchase from the Company at a price per
share of $______ (the "Purchase Price"), the number of U.S. Firm Shares set
forth opposite the name of such U.S. Underwriter in Schedule I hereto.
The Company hereby agrees to issue and sell the International Shares to the
International Managers named in Schedule II hereto, and each of the
International Managers, upon the basis of the representations and warranties
contained in this Agreement, and subject to its terms and conditions, agrees,
severally and not jointly, to purchase from the Company at the Purchase Price
the respective number of International Shares set forth opposite the name of
such International Manager in Schedule II hereto.
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On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell to the U.S. Underwriters the Additional Shares and the U.S.
Underwriters shall have the right to purchase, severally and not jointly, up to
1,500,000 Additional Shares from the Company at the Purchase Price. Additional
Shares may be purchased solely for the purpose of covering over-allotments made
in connection with the offering of the Firm Shares. The U.S. Underwriters may
exercise their right to purchase Additional Shares in whole or in part from time
to time by giving written notice thereof to the Company within 30 days after the
date of this Agreement; provided, however, that if the U.S. Underwriters
exercise their right to purchase the Additional Shares in part on more than one
occasion (other than on the Closing Date, as defined below), the U.S.
Underwriters shall pay all of the incremental expenses of the Company associated
with the closing with respect to each exercise of such right occurring after the
first Option Closing Date (as defined below). The U.S. Representatives shall
give any such notice on behalf of the U.S. Underwriters and such notice shall
specify the aggregate number of Additional Shares to be purchased pursuant to
such exercise and the date for payment and delivery thereof. The date specified
in any such notice shall be a business day (i) no earlier than the Closing Date
(as hereinafter defined), (ii) no later than ten business days after such notice
has been given and (iii) no earlier than two business days after such notice has
been given. If any Additional Shares are to be purchased, each U.S.
Underwriter, severally and not jointly, agrees to purchase from the Company the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as the U.S. Representatives may determine) which bears the same
proportion to the total number of Additional Shares to be purchased from the
Company as the number of U.S. Firm Shares set forth opposite the name of such
U.S. Underwriter in Schedule I bears to the total number of U.S. Firm Shares.
The Company hereby agrees and the Company shall, concurrently with the
execution of this Agreement, deliver an agreement executed by each person listed
on Annex I hereto, pursuant to which each such person agrees not to offer, sell,
contract to sell, grant any option to purchase, or otherwise dispose of any
common stock of the Company or any securities convertible into or exercisable or
exchangeable for such common stock or in any other manner transfer all or a
portion of the economic consequences associated with the ownership of any such
common stock, except to the Underwriters pursuant to this Agreement, for a
period of 180 days after the date of the Prospectus without the prior written
consent of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation. Notwithstanding
the foregoing, during such period (i) the Company may grant stock options
pursuant to the Company's 1997 Performance Award Plan, (ii) the Company may
issue shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security, in each case described in the Prospectus as
outstanding or to be outstanding on the Closing Date, and (iii) such person
listed on Annex I may transfer shares of Common Stock to one or more charitable
organizations, affiliates, members of such person's immediate family, or a
trust, the sole beneficiaries of which are members of such person's immediate
family or a charitable organization, and such person may pledge shares of Common
Stock, in each case if such transferee or pledgee, as the case may be, agrees in
writing to be bound by the restrictions set forth in this paragraph.
3. Terms of Public Offering. The Company is advised by you that the
------------------------
Underwriters propose (i) to make a public offering of their respective portions
of the Shares as soon after the effective date of the Registration Statement as
in your judgment is advisable and (ii) initially to offer the Shares upon the
terms set forth in the Prospectus.
Each U.S. Underwriter hereby makes to and with the Company the
representations and agreements of such U.S. Underwriter contained in the fifth
paragraph of Section 3 of the Agreement Between U.S. Underwriters and
International Managers of even date herewith. Each International
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Manager hereby makes to and with the Company the representations and agreements
of such International Manager contained in the seventh, eighth, ninth and tenth
paragraphs of Section 3 of such Agreement.
4. Delivery and Payment. Delivery to the Underwriters of and payment for
--------------------
the Firm Shares shall be made at 10:00 A.M., New York City time, on the third or
fourth business day unless otherwise permitted by the Commission pursuant to
Rule 15c6-1 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") following the date of the initial public offering (the "Closing Date"), at
such place as you shall designate. The Closing Date and the location of
delivery of and the form of payment for the Firm Shares may be varied by
agreement between you and the Company.
Delivery to the U.S. Underwriters of and payment for any Additional Shares
to be purchased by the U.S. Underwriters shall be made at such place as the U.S.
Representatives shall designate at 10:00 A.M., New York City time, on the date
specified in the applicable exercise notice given by you pursuant to Section 2
(an "Option Closing Date"). Any such Option Closing Date and the location of
delivery of and the form of payment for such Additional Shares may be varied by
agreement between the U.S. Representatives and the Company.
Certificates for the Shares shall be registered in such names and issued in
such denominations as you shall request in writing not later than two full
business days prior to the Closing Date or an Option Closing Date, as the case
may be. Such certificates shall be made available to you for inspection not
later than 9:30 A.M., New York City time, on the business day next preceding the
Closing Date or the applicable Option Closing Date, as the case may be.
Certificates in definitive form evidencing the Shares shall be delivered to you
on the Closing Date or the applicable Option Closing Date, as the case may be,
with any transfer taxes thereon duly paid by the Company, for the respective
accounts of the several Underwriters, against payment of the Purchase Price
therefor by wire transfer or certified or official bank checks payable in
Federal funds to the order of the Company.
5. Agreements of the Company. The Company agrees with you:
-------------------------
(a) To use its best efforts to cause the Registration Statement to
become effective at the earliest possible time.
(b) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) when the Registration Statement has become effective
and when any post-effective amendment to it becomes effective, (ii) of any
request by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of
qualification of the Shares for offering or sale in any jurisdiction, or
the initiation of any proceeding for such purposes, and (iv) of the
happening of any event during the period referred to in paragraph (e) below
which makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires the making of any
additions to or changes in the Registration Statement or the Prospectus in
order to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to
obtain the withdrawal or lifting of such order at the earliest possible
time.
(c) To furnish to you, without charge, six signed copies of the
Registration Statement as first filed with the Commission and of each
amendment to it, including all exhibits, and to
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furnish to you and each Underwriter designated by you such number of
conformed copies of the Registration Statement as so filed and of each
amendment to it, without exhibits, as you may reasonably request.
(d) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective, or
to make any amendment or supplement to the Prospectus (including the
issuance or filing of any term sheet within the meaning of Rule 434) of
which you shall not previously have been advised or to which you shall
reasonably object; and to prepare and file with the Commission, promptly
upon your reasonable request, any amendment to the Registration Statement
or supplement to the Prospectus (including the issuance or filing of any
term sheet within the meaning of Rule 434) which may be necessary or
advisable in connection with the distribution of the Shares by you, and to
use its best efforts to cause the same to become promptly effective.
(e) Promptly after the Registration Statement becomes effective, and
from time to time thereafter for such period as in the opinion of counsel
for the Underwriters a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, to furnish to each
Underwriter and dealer as many copies of the Prospectus (and of any
amendment or supplement to the Prospectus) as such Underwriter or dealer
may reasonably request.
(f) If during the period specified in paragraph (e) any event shall
occur as a result of which, in the opinion of counsel for the Underwriters
it becomes necessary to amend or supplement the Prospectus in order to make
the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with any law,
forthwith to prepare and file with the Commission an appropriate amendment
or supplement to the Prospectus so that the statements in the Prospectus,
as so amended or supplemented, will not in the light of the circumstances
when it is so delivered, be misleading, or so that the Prospectus will
comply with law, and to furnish to each Underwriter and to such dealers as
you shall specify, such number of copies thereof as such Underwriter or
dealers may reasonably request.
(g) Prior to any public offering of the Shares, to cooperate with you
and counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters
and by dealers under the state securities or Blue Sky laws of such
jurisdictions as you may request, to continue such qualification in effect
so long as required for distribution of the Shares and to file such
consents to service of process or other documents as may be necessary in
order to effect such registration or qualification. Notwithstanding the
foregoing, the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation.
(h) To mail and make generally available to its stockholders as soon
as reasonably practicable an earnings statement covering a period of at
least twelve months after the effective date of the Registration Statement
(but in no event commencing later than 90 days after such date) which shall
satisfy the provisions of Section 11(a) of the Act, and to advise you in
writing when such statement has been so made available.
(i) During the period of five years after the date of this Agreement,
(i) to mail as soon as reasonably practicable after the end of each fiscal
year to the record holders of its
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Common Stock a financial report of the Company and its subsidiaries on a
consolidated basis (and a similar financial report of all unconsolidated
subsidiaries, if any), all such financial reports to include a consolidated
balance sheet, a consolidated statement of operations, a consolidated
statement of cash flows and a consolidated statement of stockholders'
equity as of the end of and for such fiscal year, together with comparable
information as of the end of and for the preceding year, certified by
independent certified public accountants, and (ii) to make generally
available as soon as practicable after the end of each quarterly period
(except for the last quarterly period of each fiscal year) to such holders,
a consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period,
and for the period from the beginning of such year to the close of such
quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(j) During the period referred to in paragraph (i), to furnish to you
as soon as available a copy of each report or other publicly available
information of the Company mailed to the holders of Common Stock or filed
with the Commission and such other publicly available information
concerning the Company and its subsidiaries as you may reasonably request.
(k) To pay all costs, expenses, fees and taxes incident to (i) the
preparation, printing, filing and distribution under the Act of the
Registration Statement (including financial statements and exhibits), each
preliminary prospectus and all amendments and supplements to any of them
prior to or during the period specified in paragraph (e), (ii) the printing
and delivery of the Prospectus and all amendments or supplements to it
during the period specified in paragraph (e), (iii) the printing and
delivery of this Agreement, the Preliminary and Supplemental Blue Sky
Memoranda and all other agreements, memoranda, correspondence and other
documents printed and delivered in connection with the offering of the
Shares (including in each case any disbursements of counsel for the
Underwriters relating to such printing and delivery), (iv) the registration
or qualification of the Shares for offer and sale under the securities or
Blue Sky laws of the several states (including in each case the fees and
disbursements of counsel for the Underwriters relating to such registration
or qualification and memoranda relating thereto), (v) filings and clearance
with the National Association of Securities Dealers, Inc. in connection
with the offering of the Shares, (vi) the listing of the Shares on the New
York Stock Exchange, and (vii) furnishing such copies of the Registration
Statement, the Prospectus and all amendments and supplements thereto as may
be requested for use in connection with the offering or sale of the Shares
by the Underwriters or by dealers to whom Shares may be sold.
(l) To use its best efforts to maintain the inclusion of such Common
Stock on the New York Stock Exchange for a period of five years after the
effective date of the Registration Statement.
(m) As soon as practicable, to use its best efforts and to perform all
action necessary to qualify as a foreign corporation authorized to do
business in each jurisdiction where the nature of its business or its
ownership or leasing of property requires such qualification, except where
the failure to be so qualified would not have a material adverse effect on
the Company.
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(n) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company
prior to the Closing Date or any Option Closing Date, as the case may be,
and to satisfy all conditions precedent to the delivery of the Shares.
(o) Following the consummation of the offering of the Shares, to use
the proceeds from the sale of the Shares in the manner described in the
Prospectus under the caption "Use of Proceeds."
6. Representations and Warranties of the Company. Each of the
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Company and USR Holdings, Inc., a California corporation formerly known as U.S.
Rentals, Inc. (the "Predecessor"), represents and warrants to each Underwriter
that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) Each part of the Registration Statement, when such part
became effective, did not contain and each such part, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Act and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this paragraph (b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to
any Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, and each Registration Statement filed
pursuant to Rule 462(b) under the Act, if any, complied when so filed in
all material respects with the Act and did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) Each of the Predecessor, the Company and USR Leasing Company, a
California corporation (the "Subsidiary"), have been duly incorporated, and
each is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as it is currently being conducted and
to own, lease and operate its properties. Each of the Predecessor and the
Subsidiary is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to be so qualified would not
have a material adverse effect on the Predecessor, the Company and the
Subsidiary, taken as a whole.
(e) As of the date hereof, the Company has no subsidiaries. As of the
Closing Date, the sole subsidiary of the Company will be the Subsidiary.
All of the outstanding shares of
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capital stock of the Subsidiary have been duly authorized and validly
issued and are fully paid and non-assessable, and as of the Closing Date
will be owned of record by the Company, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature.
(f) Prior to the consummation of the transactions contemplated by the
Asset Contribution Agreement dated as of February 21, 1997 between the
Predecessor and the Company (the "Asset Contribution Agreement"), no
capital stock of the Company is or will be issued and outstanding. All
shares of capital stock of the Company that will be outstanding as of the
Closing Date will be duly authorized, validly issued, fully paid and non-
assessable and not subject to any preemptive or similar rights; and the
Shares have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(g) The authorized capital stock of the Company, including the Common
Stock, conforms as to legal matters to the description thereof contained in
the Prospectus.
(h) Neither the Predecessor, the Company nor the Subsidiary is in
violation of its respective charter or by-laws or in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any other
agreement, indenture or instrument to which the Predecessor, the Company or
the Subsidiary is a party or by which the Predecessor, the Company or the
Subsidiary or their respective property is bound, which violation or
default would have a material adverse effect on the Predecessor, the
Company and the Subsidiary, taken as a whole.
(i) The execution, delivery and performance of this Agreement,
compliance by the Company and the Predecessor with all the provisions
hereof and the consummation of the transactions contemplated hereby and the
Offering Related Transactions (as defined in the Prospectus) will not
require any consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body (except
as such may be required under securities or Blue Sky laws) and will not
conflict with or constitute a breach of any of the terms or provisions of,
or a default under, the charter or by-laws of the Predecessor, the Company
or the Subsidiary or, except as to defaults, violations or conflicts which
individually or in the aggregate would not be material to the Company and
the Subsidiary, taken as a whole, any agreement, indenture or other
instrument to which the Predecessor, the Company or the Subsidiary is a
party or by which the Predecessor, the Company or the Subsidiary or their
respective property is bound, or violate or conflict with any laws,
administrative regulations or rulings or court decrees applicable to the
Predecessor, the Company, the Subsidiary or their respective property.
(j) Except as otherwise set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Predecessor, the
Company or the Subsidiary is a party or of which any of their respective
property is the subject, which proceedings, individually or in the
aggregate, might result in a material adverse change in the business,
prospects, financial condition or results of operations of the Predecessor,
the Company and the Subsidiary, taken as a whole, and, to the best
knowledge of the Predecessor and the Company, no such proceedings are
threatened or contemplated. No contract or document of a character
required to be described in the Registration Statement or the Prospectus or
to be filed as an exhibit to the Registration Statement is not so described
or filed as required.
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(k) Neither the Predecessor, the Company nor the Subsidiary has violated
any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), nor any federal or state law relating to discrimination in the
hiring, promotion or pay of employees nor any applicable federal or state
wages and hours laws, nor any provisions of the Employee Retirement Income
Security Act or the rules and regulations promulgated thereunder, which in
each case might result in any material adverse change in the business,
prospects, financial condition or results of operations of the Predecessor,
the Company and the Subsidiary, taken as a whole.
(l) The Predecessor, the Company and the Subsidiary have such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease and operate
their respective properties and to conduct their respective businesses,
except where the failure to have such permits would not have a material
adverse effect on the Predecessor, the Company and the Subsidiary, taken as
a whole; the Predecessor, the Company and the Subsidiary have fulfilled and
performed all of their material obligations with respect to such permits
and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such permit; and,
except as described in the Prospectus, there are no restrictions contained
in such permits, compliance with which would have a material adverse effect
on the Predecessor, the Company and the Subsidiary, taken as a whole.
(m) In the ordinary course of its business, the Predecessor conducted
a regular review of the effect of Environmental Laws on the business,
operations and properties of the Predecessor transferred to the Company
pursuant to the Asset Contribution Agreement, in the course of which it
identified and evaluated associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis
of such review, the Predecessor and the Company have reasonably concluded
that such associated costs and liabilities would not, singly or in the
aggregate, have a material adverse effect on the Company and the
Subsidiary, taken as a whole.
(n) Except as otherwise set forth in the Prospectus or such as are not
material to the business, prospects, financial condition or results of
operations of the Predecessor, the Company and the Subsidiary, taken as a
whole, the Predecessor, the Company and the Subsidiary has good and
marketable title, free and clear of all liens, claims, encumbrances and
restrictions except liens for taxes not yet due and payable, to all
property and assets described in the Registration Statement as being owned
by it. All leases to which the Predecessor, the Company or the Subsidiary
is a party are valid and binding and no default has occurred or is
continuing thereunder, which might result in any material adverse change in
the business, prospects, financial condition or results of operations of
the Predecessor, the Company and the Subsidiary taken as a whole, and the
Predecessor, the Company and the Subsidiary enjoy peaceful and undisturbed
possession under all such leases to which any of them is a party as lessee
with such exceptions as do not materially interfere with the use made by
the Predecessor, the Company or the Subsidiary.
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(o) The Predecessor maintains and, as of the Closing Date, the Company
will maintain, insurance and self-insurance reserves that taken as a whole
are reasonably adequate.
(p) Price Waterhouse LLP are independent public accountants with
respect to the Predecessor and the Company as required by the Act.
(q) The financial statements, together with related schedules and
notes forming part of the Registration Statement and the Prospectus (and
any amendment or supplement thereto), present fairly the consolidated
financial position, results of operations and changes in financial position
of the Predecessor, the Company and the Subsidiary on the basis stated in
the Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; the other financial and statistical information and data
set forth in the Registration Statement and the Prospectus (and any
amendment or supplement thereto) is, in all material respects, accurately
presented and prepared on a basis consistent with such financial statements
and the books and records of the Predecessor and the Company; and the pro
forma financial statements and the related notes thereto included in the
Registration Statement and the Prospectus have been prepared in accordance
with the applicable requirements of the Act and on the basis described
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein.
(r) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(s) Except as set forth in the Prospectus, no holder of any security
of the Company has any right to require registration of shares of Common
Stock or any other security of the Company.
(t) In the case of Rule 434(b) term sheets, such term sheet and
prospectus subject to completion provided by the Company to the Underwriters for
use in connection with the offering and sale of the Shares pursuant to Rule 434
under the Act together are not materially different from the prospectus included
in the Registration Statement at the time of effectiveness or an effective post-
effective amendment thereto and such term sheet sets forth all information
material to investors with respect to the offering that is not disclosed in the
prospectus subject to completion or the confirmation.
(u) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, the Company or the
Subsidiary except as otherwise disclosed in the Prospectus.
(v) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed
therein by Item 404 of Regulation S-K of the Commission.
(w) There is (i) no significant unfair labor practice complaint
pending against the Predecessor, the Company or the Subsidiary or, to the
best knowledge of the Predecessor or the Company, threatened against any of
them, before the National Labor Relations Board or any state
10
or local labor relations board, and no significant grievance or more
significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Predecessor, the Company or
the Subsidiary or, to the best knowledge of the Predecessor or the Company,
threatened against any of them, and (ii) no significant strike, labor
dispute, slowdown or stoppage pending against the Predecessor, the Company
or the Subsidiary or, to the best knowledge of the Predecessor or the
Company, threatened against it or the Subsidiary except for such actions
specified in clause (i) or (ii) above, which, singly or in the aggregate
could not reasonably be expected to have a material adverse effect on the
Predecessor, the Company and the Subsidiary, taken as a whole.
(x) The Predecessor, the Company and the Subsidiary maintain a system
of internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(y) All material tax returns required to be filed by the Predecessor,
the Company and the Subsidiary in any jurisdiction have been filed, other
than those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and
other charges due pursuant to such returns or pursuant to any assessment
received by the Predecessor, the Company or the Subsidiary have been paid,
other than those being contested in good faith and for which adequate
reserves have been provided.
(z) The Company has filed a registration statement pursuant to Section
12(b) of the Exchange Act, to register the Common Stock, has filed an
application to list the Shares on the New York Stock Exchange, and has
received notification that the listing has been approved, subject to notice
of issuance of the Shares.
(aa) The Predecessor, the Company and the Subsidiary possess, or
possess the right to use, the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively,
"Intellectual Property") presently employed by them in connection with the
businesses now operated by them, and neither the Predecessor, the Company
nor the Subsidiary has received any notice of infringement of or conflict
with asserted rights of others with respect to the foregoing which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a material adverse change in the business,
prospects, financial condition or results of operations of the Predecessor,
the Company and the Subsidiary, taken as a whole. The use of such
Intellectual Property in connection with the business and operations of the
Predecessor, the Company and the Subsidiary does not, to the Predecessor's
and the Company's knowledge, infringe on the rights of any person.
(ab) The statistical and market-related data included in the
Prospectus are based on or derived from sources which the Predecessor and
the Company believe to be reliable and accurate in all material respects.
11
7. Indemnification.
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(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against
any and all losses, claims, damages, liabilities and judgments caused by
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any
Underwriters furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use therein; provided, however, that
the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages, liabilities and
judgments purchased Shares, or any person controlling such Underwriter, if
a copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Underwriter to such person, if required by
law so to have been delivered, at or prior to the written confirmation of
the sale of the Shares to such person, and if the Prospectus (as so amended
and supplemented) would have cured the defect giving rise to such loss,
claim, damage, liability or judgment.
(b) In case any action shall be brought against any Underwriter or any
person controlling such Underwriter, based upon any preliminary prospectus,
the Registration Statement or the Prospectus or any amendment or supplement
thereto and with respect to which indemnity may be sought against the
Company, such Underwriter shall promptly notify the Company in writing and
the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such indemnified party and payment of
all fees and expenses. Any Underwriter or any such controlling person
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling
person unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Company, (ii) the Company shall
have failed to assume the defense and employ counsel or (iii) the named
parties to any such action (including any impleaded parties) include both
such Underwriter or such controlling person and the Company and such
Underwriter or such controlling person shall have been advised by such
counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the Company (in
which case the Company shall not have the right to assume the defense of
such action on behalf of such Underwriter or such controlling person, it
being understood, however, that the Company shall not, in connection with
any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel
reasonably necessary for the defense of any such action) for all such
Underwriters and controlling persons, which firm shall be designated in
writing by Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and that all
such fees and expenses shall be reimbursed as they are incurred). The
Company shall not be liable for any settlement of any such action effected
without its written consent but if settled with the written consent of the
Company, the Company agrees to indemnify and hold harmless any Underwriter
and any such controlling person from and against any loss or liability by
reason of
12
such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each Underwriter
but only with reference to information relating to such Underwriter
furnished in writing by or on behalf of such Underwriter through you
expressly for use in the Registration Statement, the Prospectus or any
preliminary prospectus. In case any action shall be brought against the
Company, any of its directors, any such officer or any person controlling
the Company based on the Registration Statement, the Prospectus or any
preliminary prospectus and in respect of which indemnity may be sought
against any Underwriter, the Underwriter shall have the rights and duties
given to the Company (except that if the Company shall have assumed the
defense thereof, such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof but
the fees and expenses of such counsel shall be at the expense of such
Underwriter), and the Company, its directors, any such officers and any
person controlling the Company shall have the rights and duties given to
the Underwriter, by Section 7(b) hereof. The statements contained in the
Prospectus in the fifth and twelfth paragraphs of the section captioned
"Underwriting" constitute the only information heretofore furnished to the
Company in writing by any Underwriter expressly for use in the Registration
Statement, the Prospectus or any preliminary prospectus.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and judgments (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other hand from
the offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Underwriters
in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Underwriters shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses)
received by the Company, and the total underwriting discounts and
commissions received by the Underwriters, bear to the total price to the
public of the Shares, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company and the
Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
13
The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7(d) were determined
by pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities or judgments referred
to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 7(d) are several in proportion to
the respective number of Shares purchased by each of the Underwriters
hereunder and not joint.
8. Conditions of Underwriters' Obligations. The several obligations
---------------------------------------
of the Underwriters to purchase the Firm Shares under this Agreement are subject
to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and the
Predecessor contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing Date.
(b) The Registration Statement shall have become effective not later
than 5:00 P.M. (and in the case of a Registration Statement filed under Rule
462(b) of the Act, not later than 10:00 P.M.), New York City time, on the date
of this Agreement or at such later date and time as you may approve in writing,
and at the Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending before or contemplated by
the Commission.
(c) (i) Since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, there shall not have been any
material adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the earnings,
affairs or business prospects, whether or not arising in the ordinary course of
business, of the Company or the Predecessor, (ii) since the date of the latest
balance sheet included in the Registration Statement and the Prospectus there
shall not have been any change, or any development involving a prospective
material adverse change, in the capital stock or in the long-term debt of the
Company or the Predecessor from that set forth in the Registration Statement and
Prospectus, (iii) the Predecessor, the Company and the Subsidiary shall have no
liability or obligation, direct or contingent, which is material to the Company
and the Subsidiary, taken as a whole, other than those reflected in the
Registration Statement and the Prospectus and (iv) on the Closing Date you shall
have received a certificate dated the Closing Date, signed by Xxxxxxx X. Xxxxx
and Xxxx X. XxXxxxxx, in their capacities as President and Chief Executive
Officer and Chief Financial Officer, respectively, of the Company and the
Predecessor confirming the matters set forth in paragraphs (a), (b), and (c) of
this Section 8.
14
(d) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of O'Melveny & Xxxxx LLP, counsel for the Company, to the effect that:
(i) The Company, the Predecessor and the Subsidiary have been duly
incorporated, and each is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation with the
corporate power to own, lease and operate its properties and assets and to
carry on its businesses as described in the Registration Statement.
(ii) The outstanding shares of capital stock of the Subsidiary have
been duly authorized by all necessary corporate action on the part of the
Subsidiary and are validly issued, fully paid and non-assessable, and are
owned of record by the Company.
(iii) The outstanding shares of capital stock of the Company have
been duly authorized by all necessary corporate action on the part of the
Company and are validly issued, fully paid and non-assessable.
(iv) The Shares have been duly authorized by all necessary corporate
action on the part of the Company, and, upon payment for and delivery of
the Shares in accordance with this Agreement and the countersigning of the
certificate or certificates representing the Shares by a duly authorized
signatory of the registrar for the Company's Common Stock, the Shares will
be validly issued, fully paid and non-assessable. Holders of the capital
stock of the Company are not entitled to any preemptive right to subscribe
to any additional shares of the Company's capital stock under the Company's
Restated Certificate of Incorporation or Amended and Restated Bylaws, any
Delaware, New York or California statute or regulation or any agreement
filed as an Exhibit to the Registration Statement (the "Filed Agreements").
(v) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of the
Company and the Predecessor, and this Agreement has been duly executed and
delivered by the Company and the Predecessor.
(vi) The Registration Statement has become effective under the Act
and, to the knowledge of such counsel, no stop order suspending its
effectiveness has been issued and no proceedings for that purpose are
pending before or contemplated by the Commission.
(vii) The statements in the Prospectus under the captions "Risk
Factors--Anti-Takeover Provisions," "Risk Factors--Shares Eligible for
Future Sale; Registration Rights," "Offering Related Transactions,"
"Certain Transactions," "Description of Capital Stock," "Shares Eligible
for Future Sale," "Certain United States Federal Tax Consequences to Non-
United States Holders of Common Stock," and "Underwriting" in the
Prospectus and Items 14 and 15 of Part II of the Registration Statement
insofar as such statements summarize the Company's Restated Certificate of
Incorporation, the Amended and Restated Bylaws, Registration Rights
Agreement, Asset Contribution Agreement, Cancellation of Deferred
Compensation Agreements and Indemnification Agreements (each as defined in
the Registration Statement) or the provisions of any statute or regulation
referred to therein, accurately present in all material respects the
information required by Form S-1.
(viii) The Predecessor's and the Company's execution and delivery of,
and performance of their respective obligations under, this Agreement and
the Asset Contribution Agreement do
15
not (A) violate the Predecessor's and the Company's charter or bylaws, (B)
violate, breach, or result in a default under, any existing obligation of
or restriction on the Predecessor or the Company under any Filed Agreement,
or (C) breach or otherwise violate any existing obligation of or
restriction on the Predecessor or the Company under any order, judgment or
decree of any New York, California, Delaware or federal court or
governmental authority binding on the Predecessor or the Company that such
counsel has, in the exercise of customary professional diligence,
recognized as applicable to the Predecessor or the Company or to
transactions of the type contemplated by this Agreement, except that, such
counsel need not express an opinion regarding any federal securities laws
or Blue Sky or state securities laws, or the Predecessor's compliance with
financial covenants in any Filed Agreement.
(ix) No order, consent, permit or approval of any New York,
California, Delaware or federal governmental authority that such counsel
has, in the exercise of customary professional diligence, recognized as
applicable to the Predecessor or the Company or the transactions of the
type contemplated by this Agreement is required on the part of the
Predecessor or the Company for the execution and delivery of, and
performance of their respective obligations under, this Agreement or the
Asset Contribution Agreement. The execution and delivery by the
Predecessor and the Company of, and performance of their respective
obligations under, this Agreement and the Asset Contribution Agreement, do
not violate any New York, California, Delaware or federal statute or
regulation that such counsel has, in the exercise of customary professional
diligence, recognized as applicable to the Predecessor or the Company or to
transactions of the type contemplated by this Agreement except that, such
counsel need not express an opinion regarding any federal securities laws
or Blue Sky or state securities laws.
(x) Such counsel does not know of any legal or governmental proceeding
pending or threatened to which the Predecessor, the Company or the
Subsidiary is a party or to which any of their respective property is
subject which is required to be described in the Registration Statement or
the Prospectus and is not so described, or of any contract or other
document of a character required to be described in the Registration
Statement or the Prospectus or filed as an exhibit to the Registration
Statement which is not described or filed as required.
(xi) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(xii) The Offering Related Transactions have been duly and validly
authorized by all necessary corporate action on the part of each of the
Predecessor and the Company, as applicable.
(xiii) To the best of such counsel's knowledge, no holder of any
security of the Company has any right to require registration of shares of
Common Stock or any other security of the Company, except as described in
the Prospectus.
(xiv) The Registration Statement, on the date it was filed, appeared
on its face to comply in all material respects with the requirements as to
form for registration statements on Form S-1 under the Act and related
rules and regulations in effect at the date of filing, except that such
counsel need not express an opinion concerning the financial statements and
other financial information contained or incorporated by reference therein.
(xv) In addition, such opinion shall contain a statement to the effect
that in connection with such counsel's participation in the preparation of
the Registration Statement and the
16
Prospectus, they have not independently verified the accuracy, completeness
or fairness of the statements contained therein, and the limitations
inherent in the examination made by such counsel and the knowledge
available to such counsel are such that such counsel is unable to assume,
and does not assume, any responsibility for such accuracy, completeness or
fairness, except as otherwise specifically stated in clause (vii) above.
However, on the basis of such counsel's review and participation in
conferences in connection with the preparation of the Registration
Statement and the Prospectus, and relying as to materiality to a large
extent on the opinions of officers and other representatives of the
Company, such counsel does not believe that the Registration Statement as
of its effective date contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and such counsel does not
believe that the Prospectus on the date hereof contains any untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Such counsel need not express an opinion or belief as to the financial
statements or other financial information contained in the Registration
Statement or the Prospectus.
The opinion of O'Melveny & Xxxxx LLP described in paragraph (d) above
shall be rendered to you at the request of the Company and shall so state
therein.
(e) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Xxxxxx & Xxxxxxx, counsel for the Underwriters, as to the
matters referred to in clauses (iv), (v), (vi), (vii) (but only with respect to
the statements under the caption "Description of Capital Stock" and
"Underwriting") and (xv) of the foregoing paragraph (d). In giving such opinion
with respect to the matters covered by clause (xv) such counsel may state that
their opinion and belief are based upon their participation in the preparation
of the Registration Statement and Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof, but are without
independent check or verification except as specified.
(f) You shall have received a letter on and as of the Closing Date, in
form and substance satisfactory to you, from Price Waterhouse LLP, independent
public accountants, with respect to the financial statements and certain
financial information contained in the Registration Statement and the Prospectus
substantially in the form and substance of the letter delivered to you by Price
Waterhouse LLP on the date of this Agreement.
(g) The Company shall have delivered to you the agreements specified
in Section 2 hereof.
(h) The Company shall not have failed at or prior to the Closing Date
to perform or comply with any of the agreements herein contained and required to
be performed or complied with by the Company at or prior to the Closing Date.
(i) As of the Closing Date, the Offering Related Transactions (as
defined in the Prospectus) shall have been consummated (including all
transactions contemplated by the Asset Contribution Agreement) and there shall
have been no material amendments, alterations, modifications or waivers to the
form of any Filed Agreement on or prior to the date hereof or in the exhibits or
schedules thereto.
17
(j) You shall have received complete sets of all documents, including,
without limitation, all opinions, required to be delivered in connection with
the Offering Related Transactions.
The several obligations of the Underwriters to purchase any Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of such Additional
Shares and other matters related to the issuance of such Additional Shares.
9. Effective Date of Agreement and Termination. This Agreement
-------------------------------------------
shall become effective upon the later of (i) execution of this Agreement and
(ii) when notification of the effectiveness of the Registration Statement has
been released by the Commission.
This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Company if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Predecessor, the Company and the Subsidiary,
taken as a whole, or the earnings, affairs, or business prospects of the
Predecessor, the Company and the Subsidiary, taken as a whole, whether or not
arising in the ordinary course of business, which would, in your judgment, make
it impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus; (ii) any outbreak or escalation of hostilities
or other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in your judgment, is material and adverse and would, in your judgment, make it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus; (iii) the suspension or material limitation of trading in
securities on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market System or limitation on prices for securities on any such
exchange or the Nasdaq National Market System; (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business or operations of the Predecessor, the Company or the Subsidiary; (v)
the declaration of a banking moratorium by either federal or New York State
authorities; or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I bears to the total number of Firm
Shares which all the non-defaulting Underwriters, as the case may be, have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase on such date; provided that in no event shall the number of Firm Shares
or Additional Shares, as the case may be, which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date or on an
18
Option Closing Date, as the case may be, any Underwriter or Underwriters shall
fail or refuse to purchase Firm Shares, or Additional Shares, as the case may
be, and the aggregate number of Firm Shares or Additional Shares, as the case
may be, with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares to be purchased on such date by all Underwriters and
arrangements satisfactory to you and the Company for purchase of such Shares are
not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter and the Company.
In any such case which does not result in termination of this Agreement, either
you or the Company shall have the right to postpone the Closing Date or the
applicable Option Closing Date, as the case may be, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of any such
Underwriter under this Agreement.
10. Miscellaneous. Notices given pursuant to any provision of this
-------------
Agreement shall be addressed as follows: (a) if to the Company, to U.S.
Rentals, Inc., 0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxx X. XxXxxxxx, and (b) if to any Underwriter or to you, to you c/x
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Syndicate Department, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, its officers and directors and
of the several Underwriters set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive delivery
of and payment for the Shares, regardless of (i) any investigation, or statement
as to the results thereof, made by or on behalf of any Underwriter or by or on
behalf of the Company, the officers or directors of the Company or any
controlling person of the Company, (ii) acceptance of the Shares and payment for
them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters because of
any failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the several Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
U.S. RENTALS, INC., a Delaware corporation
By: ________________________________________
Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive Officer
USR HOLDINGS, INC., a California corporation
By: ________________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
SALOMON BROTHERS INC
Acting severally on behalf of themselves
and the several U.S. Underwriters named
in Schedule I hereto
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
XXXXXXX XXXXX INTERNATIONAL
SALOMON BROTHERS INTERNATIONAL LIMITED
Acting severally on behalf of themselves
and the several International Managers
named in Schedule II hereto
By XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By: ______________________________________
Name: Xxxxxxx X. Xxxx
Title: Vice President
20
SCHEDULE I
Number of Firm Shares
U.S. Underwriters to be Purchased
----------------- -----------------------
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Salomon Brothers Inc
---------
Total 8,000,000
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SCHEDULE II
Number of Firm Shares
International Managers to be Purchased
---------------------- -----------------------
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
Xxxxxxx Xxxxx International
Salomon Brothers International Limited
---------
Total 2,000,000
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ANNEX I
REQUIRED LOCK-UP AGREEMENTS
Xxxxxxx X. Xxxxxxx
USR Holdings, Inc. (a California corporation f/k/a U.S. Rentals, Inc.)
23